RETAIL SECTOR DEVELOPMENT STRATEGY · Nyandeni Local Municipality (NLM) is one of the five (5)...
Transcript of RETAIL SECTOR DEVELOPMENT STRATEGY · Nyandeni Local Municipality (NLM) is one of the five (5)...
2016 | Nyandeni Local Municipality Retail Sector Strategy Page 1
RETAIL SECTOR DEVELOPMENT STRATEGY
NYANDEI LOCAL MUNICIPALITY
(NLM)
2016
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Table of Contents 1 Introduction ......................................................................................................................................................... 8
1.1 Background Information ........................................................................................................................... 8
1.2 Locality ........................................................................................................................................................ 8
1.3 Objectives ................................................................................................................................................... 8
1.4 Definition of the Retail Sector .................................................................................................................. 9
1.5 Principles underpinning the Strategy ...................................................................................................... 9
1.6 Methodology ............................................................................................................................................. 10
1.7 Approach ................................................................................................................................................... 11
1.7.1 Desktop Research ..................................................................................................................................... 11
1.7.2 Stakeholder Consultation ......................................................................................................................... 11
2 Situational Analysis ............................................................................................................................................. 14
2.1 Legislative Policy Context ............................................................................................................................ 14
2.2 Socio Economic Profile ................................................................................................................................ 17
2.3 Economic Profile ........................................................................................................................................... 18
2.3.1 Economic Sector Performance ............................................................................................................ 18 2.3.2 Retail Sector Analysis .......................................................................................................................... 19
2.4 Infrastructure profile ...................................................................................................................................... 21
2.5 Environmental profile .................................................................................................................................... 22
2.6 Institutional Profile ........................................................................................................................................ 23
2.6.1 Internal Structures ................................................................................................................................. 23 2.6.2 External Structures ................................................................................................................................ 24
3 Conclusion ............................................................................................................................................................. 25
4. Strategic Framework ......................................................................................................................................... 27
4.1 Introduction .................................................................................................................................................... 27
4.2 Vision .............................................................................................................................................................. 27
4.3 Strategic Objectives ...................................................................................................................................... 28
4.4 Strategic Framework Matrix ........................................................................................................................ 28
4.5 Priority Project/Initiatives ........................................................................................................................... 29
4.5.1 Project Summaries ................................................................................................................................ 30 5. Implementation Plan .......................................................................................................................................... 42
6. Institutional Framework ..................................................................................................................................... 46
7. Monitoring and Evaluation Framework ........................................................................................................... 49
8. Conclusion ............................................................................................................................................................ 55
9. Annexure .............................................................................................................................................................. 55
9.1 Business Plan - Informal Trade Shared Economic Infrastructure Facility ............................................ 55
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Glossary of Terms
CBO Community Based Organisation
CDW Community Development Worker
COGTA Department of Cooperative Governance and Traditional Affairs
DEDEAT Department of Economic Development, Environmental Affairs and Tourism
DoSoc Department of Social Development
DOT Department of Transport
DPW Department of Public Works
DRDLR Department of Rural Development and Land Reform
DSBD Department of Small Business Development
DTI Department of Trade and Industry
EC Eastern Cape
ECDC Eastern Cape Development Corporation
ECSECC Eastern Cape Socio Economic Consultative Council
EXCO Executive Committee
IDC Industrial Development Corporation
IDP Integrated Development Plan
IGR Inter-Governmental Relations
KPA Key Performance Area
GDP Gross Domestic Product
LED Local Economic Development
LM Local Municipality
LRED Local and Regional Economic Development
M&E Monitoring and Evaluation
NEF National Empowerment Fund
NLM Nyandeni Local Municipality
NYDA National Youth Development Agency
ORTDM OR Tambo District Municipality
PMS Performance Management System
PSC Project Steering Committee
SA South Africa
SALGA South African Local Government Association
SANRAL South African National Roads Agency Limited
SDBID Service Delivery and Budget Implementation Plan
SEDA Small Enterprise Development Agency
SEFA Small Enterprise Finance Agency
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SETA Sector Education and Training Authority
SIC StNtingard Industrial Classification
SMMEs Small Medium and Micro Enterprises
SO Strategic Objectives
SP Strategic Programme
WSU Walter Sisulu University
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Executive Summary
Nyandeni Local Municipality (NLM) is one of the five (5) Local Municipalities (LM) of the OR Tambo District
Municipality (O.RTDM), located in the Eastern Cape (EC) Province in South Africa (SA), situated in the
eastern part of the former Transkei region of the EC. The municipality has undertaken a process of
developing a retail sector development strategy, from the basis that the strategy can increasingly
strengthen the local economic capacity, improve the investment climate, and increase the productivity and
competitiveness of local businesses, entrepreneurs and the labour force, for overall economic growth. This
would then empower the local communities in structuring their socio-economic economic situations through
effective utilization of both hard and soft infrastructure, so as to stimulate the growth required to create jobs,
and thereby reduce poverty in NLM.
An assessment of the socio-economic profile in NLM indicates a distressed community, which is faced by
the triple challenges of poverty, unemployment and inequality. Being that the case, the local area has been
identified to have a potential in key economic sectors, which can be development for economic growth, and
currently the Wholesale and Trade sector in this municipality is underperforming.
This strategy therefore proposes strategic objectives, programmes and related projects/initiatives, within a
broad LED vision, as articulated in the LED Strategy, and these are captured below in the following
Strategic Framework Matrix:
Strategic Framework Matrix
Strategic Objectives Strategic Programmes Priority Projects/Initiatives
1. Build an efficient municipal governance support system for effective retail sector development.
1.1 Institutional and Organisational Development
1.1.1 Human resource capacity development
1.1.2 Sector Research and Knowledge Management 1.1.3 Supportive Retail Sector Municipal Land Use Management Policies and By-Laws
2. Strengthen collaboration and networking between retail sector businesses in NLM
2.1 Chamber Development and Associational networks
2.1.1 Retail Sector Forum Development and Support
2.1.2 Networking and Information sharing
3. Improve the provision of basic services and critical catalytic infrastructure.
3.1 Business Enabling Support Infrastructure
3.1.1 Investment in Hard Infrastructure
3.1.2 Investment in Sites and Premises
3.2 Trading Support Infrastructure
3.2.1 Informal Trade Shared Economic Infrastructure Facility
3.2.2 Ward/ Village Based Cooperatives Wholesale Trading and Marketing Hubs
4. Stimulate and grow thriving retail sector businesses.
4.1. Financial Support
4.1.1 Sector Development Financing Instrument
4.1.2 Financial Savings and Credit Schemes
4.2 Non Financial Support 4.2.1 Sector skills development
4.2.2 Access to information
4.2.3 Access to markets
4.2.4 Mentorship
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A three (3) year implementation plan for the strategy is herein also proposed, to serve as an integrated
programming document, that will maintain and clarity the strategic direction, and ensure that programs and
projects get implemented over a 3 - year time frame, before the strategy can be reviewed. The
implementation plan proposes estimated annual budgetary figures, which will need to be lobbied from a
wide number of stakeholders, representing both the public and the private sector, such that these
stakeholders can be able to bring in both financial and non financial resources, towards implementing this
strategy.
It is further recommended that the strategy be implemented and monitored using a combination of both
internal and external institutional structures, some of which can either be initiated, or strengthened, as a
way of developing the retail sector in NLM.
The primary internal implementation structure for this strategy will need to be the Planning and Economic
Development Department within NLM, which in terms of municipal service delivery models, is considered to
be the main nerve centre that facilitates, co-ordinates and promotes small businesses, within the broader
LED Key Performance Area (KPA) of local government, of which retail sector development falls under. This
department will work in close collaboration with external delivery structures, which will be responsible for
providing the necessary support towards the achievement of the proposed objectives, as well as monitor
and evaluate the impact of the strategy, within broader socio-economic development and growth, in NLM.
The recommended external structures will need to be:
O.RTDM;
Ntinga OR Tambo Economic Development Agency;
LED Forum;
Business Chamber/Associations;
Hawkers/ Informal Trade Association, and
Co-operatives Forum
It is further recommended that the monitoring and evaluation (M&E) of the strategy gets intergrated within
the annual Service Delivery and Budget Implementation Planning (SDBIP) cycles of the LED department
within NLM, which will require the setting up of clear indicators that will be necessary to measure inputs,
outputs, outcomes, and the impact of each of the proposed project to be implemented in the strategy,
which will need to be consolidated to determine program success, and provide an overall assessment of
the effectiveness of the strategy, in contributing towards economic growth in NLM.
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SECTION A
Introduction
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1 Introduction
1.1 Background Information
Nyandeni Local Municipality (NLM) is one of the five (5) Local Municipalities (LMs) under the O.RTDM,
which is located in the EC Province in SA. The municipality is situated in the eastern part of the former
Transkei region of the EC. The municipality is further classified as category “B4-Municipality”, signifying a
mainly predominantly rural municipality, with widely dispersed traditional and village-type settlements of
communal tenure, and a subsistence economy.
1.2 Locality
NLM is made up of two (2) small towns, namely Libode and Ngqeleni, which are spread over thirty one (31)
wards. The location of the NLM within the ORTDM is shown on the map below:
Map 1:Nyandeni Local Municipality
1.3 Objectives
The Retail Sector Strategy is aimed to be utilized as a tool by the municipality, as well as by other role
players within the enterprise development space, to ensure a dedicated, integrated and effective
development and support mechanisms for the Retail Sector, which mainly consists of the Small Medium
and Micro Enterprises (SMMEs), including the Informal Trade, as well as Cooperatives Entities, for the
overall promotion of local economic development (LED), and thus contribute towards the district, the
provincial, and national economic growth targets.
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1.4 Definition of the Retail Sector
The Retail trade industry can be defined by using the classifications from the Standard Industrial
Classification (SIC) from Statistics South Africa (Stats SA). It falls under division 62 of the SIC. This
industry is said to include “the reselling (sale without transformation) of new and used goods to the general
public for personal or household consumption, or use by shops, department stores, stalls, mail-order
houses, hawkers and peddlers, consumer co-operatives, etc”. Establishments that are classified under this
division include amongst others, those that sell to the general public, from retail products, such as type
writers, stationery, paint or lumber, etc.
The retail trade division excludes “the sale of manufactured goods (e.g. draperies, food) to be sold
exclusively to the general public for personal or household consumption purposes”. It also excludes “the
sale of motor vehicles and motor cycles and their parts and of automotive fuel, the sale of motor vehicles or
other goods to institutional or industrial users, the sale of food and drinks for consumption on the premises
(i.e. bars, restaurants) and the renting of personal and household goods to the general public”.
According to Stats SA, the retail industry forms part of the major trade division which includes Wholesale &
Retail Trade, Personal & Household Goods, and Hotels & Restaurants. The retail industry is thus
composed of seven (7) clusters, which are:
General dealers;
Retailers of food, beverages and tobacco in specialised stores;
Retailers in pharmaceutical and medical goods, cosmetics and toiletries;
Retailers in textiles, clothing, footwear and leather goods;
Retailers in household furniture, appliances and equipment;
Retailers in hardware, paint and glass; and
All other retailers.
1.5 Principles underpinning the Strategy
The Retail Sector Strategy will be guided by the following principles
Principle Detail
Inclusive, Democratic
Participation for Better
Decision-making
Various interest groups and communities are consulted and allowed to
participate during the strategy development process, and also commit to
working towards the realization of the strategy.
Cooperative
Government, Alignment
and Integration
For strengthened and improved cooperation between the different spheres
and sectors of government, as well as promote aligned and integrated
planning between and across spheres sectors.
Empowerment Address the inequalities and spatial distortions of the apartheid economy.
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Targeted interventions must especially empower poor black people, women,
rural people and the disabled, both individually and as communities. National
instruments for economic empowerment and affirmative action should be put
into practice locally. The strategy must thus be used to build local capabilities.
Sustainability Ensure sustainable local development economically, environmentally,
institutionally, and socially.
Realistic assessment of
local capacity
Be based on a realistic assessment of the current state of the retail sector
within the municipality, the challenges the sector is facing, and the level of
related infrastructure development within the actual capacity of the
municipality.
Good governance Have interventions that strengthen democratic, inclusive, accountable,
transparent and efficient governance practices.
Evaluation and learning: The implementation of the strategy should allow for continuous evaluation and
learning from experiences, so as to adapt and respond to changes.
1.6 Methodology
The process of developing the strategy unfolded in sequential phases, with each marking the attainment of
a defined milestone. The methodology adopted included seven (7) distinct and interrelated phases, as
summarized in the table below, and some of the phases were conducted concurrently due to the
interrelations between them:
Phase Purpose
Project Inception To establish the rationale, plot and formalize the project execution process so
as to confirm, consolidate and agree on the scope of work, as well as the
budget and payment terms.
Situational/ Status
Quo Analysis
Conduct a “soft touch” document analysis and literature review of all available
and existing evidence, in order to have a clear understanding of the context
within which the Retail Sector Strategy will be developed.
Crafting the Strategic
Development
Framework
Develop a strategic development framework that sets a shared sector
development vision, strategic goals, clear and attainable objectives, projects,
with measures for Business Retention and Expansion, and Tools for Red
Tape Reduction for the development of the retail sector herein also proposed.
Propose Institutional
Arrangements
Propose appropriate institutional arrangements to best facilitate optimal Retail
Sector development in NLM.
Development of the
Implementation Plan
Establish a clear plan with defined criteria to indicate milestones along
implementation timelines, with clearly outlined responsibilities for the
implementation of the actions.
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Development of the
M&E Framework
Develop a framework for a systematic and continuous assessment of the
achievement and effectiveness of the objectives of the Retail Sector strategy.
Write-up of the Retail
Sector Strategy and 1
x Business Plan for
the Informal Trade
Sector
Develop a comprehensive outline of the Retail Sector Strategy document that
is an ultimate product of the entire phases, to involve the identification of 1 x
project that has been proposed in the strategy, for the development of a
Business Plan that will be targeting the Informal Trade Sector.
The diagram below outlines the key milestones of the strategy development process:
Figure 1: Milestones
1.7 Approach
1.7.1 Desktop Research
Desktop research was undertaken so as to collect national, provincial, as well as local information, which
can assist in the strategy development process. These included relevant legislation; policies, strategies and
plans. The sources of information extracted consist of:
Internet websites;
Legislation, strategies and policies related to LED broadly, SMME and Retail Sector planning and
programming specifically;
Publications and research documents;
Other strategic documents of institutions involved in economic development and support.
1.7.2 Stakeholder Consultation
Stakeholder consultation and participation is a key contributor to effective legitimate decision making. It
facilitates the awareness and education of participating citizens concerning issues relating to decision
making processes. It also has the potential to increase technical competence, and strengthen local
people’s level of commitment to support the implementation of the decisions and development plans, thus
ensuring sustainable development.
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This process involved conducting focus group consultations with key local stakeholders in the municipality
through a structured Project Steering Commitee (PSC) that consisted of members of the LED Forum in
Nyandeni, so as to:
Provide more local insights into the area’s socio-economic assessment;
Identify existing support programmes as well as their impact;
Identify delivery retail sector problems & challenges, and
Identify current opportunities for further development.
The stakeholders that were consulted and engaged included:
Public Sector Private Sector Community Sector
National and
Provincial Government
Departments
Local Government
Association (SALGA)
District Municipality
(OR Tambo)
Government
Entities/ Agencies
Institutions of
Higher Learning
Formal
Business/Chamber
Associations and Forums
Informal Trade Sector
Associations
Cooperatives Forums
(District and Local)
Ward Councillors
Representatives of Ward
Committees
Non Governmental and Civil
Society Organizations
Traditional Leaders
Youth and Women’s groups
Structures for the disabled
Community Development Workers
(CDWs)
Organized Labour
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SECTION B
Status Quo
/
Situational Analysis
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2 Situational Analysis
2.1 Legislative Policy Context
This part of the situational analysis is meant to provide an overview of some of the relevant national,
provincial, district and local municipal planning policies and strategy documents, that need to inform and
guide Retail Sector development in NLM, within the broader context of economic development generally,
and enterprise and sector development specifically.
A key outcome of this part will be the gaining of an improved cognisance of strategic imperatives that
emanate from all the different tiers of government, and would have an impact towards the development of
the retail sector. The following are a number of strategic policies that were reviewed and analysed.
1) Intergrated Small Business Strategy, 2005
2) DTI Strategy for promoting the Co-operatives Sector in SA (2012-2022)
3) National LED Framework,2014
4) EC Local and Regional Economic Development Strategy (LRED), 2010
5) EC Integrated strategy for promotion of entrepreneurship and small enterprises, 2008
6) EC Strategy and Implementation Plan for Support and Development of Co-operatives, 2008
7) ORTDM LED Strategy, 2014
8) ORTDM SMME and Cooperatives Development Strategy and Implementation Plan,2014
9) NLM IDP 2012-2016
10) NLM LED Strategy
11) NLM SMMME and Cooperatives Development Strategy
12) NLM Agriculture Sector Plan, 2012
13) Responsible Tourism Sector Plan
Intergrated Small Business Strategy, 2005, presents the way forward for small enterprise development in
SA over the next ten years (i.e. 2005 to 2014). The strategy is based on the following three pillars:
Promoting entrepreneurship through campaigns, leadership training and awards.
Strengthening the enabling environment through more flexible regulations, better access to finance
and markets, improved infrastructure facilities, and business support.
Enhancing competitiveness and capacity at the enterprise level through skills training, more focused
quality, productivity, and competitiveness-support, and the facilitation of technology transfer and
commercialisation of incubation.
DTI Strategy for promoting the Co-operatives Sector in SA (2012-2022), released by government as a clear
government commitment to promoting an integrated and sustainable Co-operatives sector in SA over a ten-
year period , sets out an “implementation framework” for the Co-operatives Development Policy of 2004, as
well as the Co-operatives Act of 2005, as amended. The Strategy is informed by the following pillars:
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Increase the supply of financial services to cooperatives.
Create demand for cooperative products and services.
Improve the sustainability of cooperatives.
Increase the supply of non financial services to cooperatives.
National Framework for LED, 2014 provides a framework which sets key priorities for LED, and create
consensus among stakeholders on fundamentals for LED in the country. The core pillars of this strategy
are:
Building a diverse economic base.
Developing learning and skilful economies.
Developing inclusive economies.
Enterprise development and support, and
Economic governance.
Local and Regional Economic Development Strategy (LRED), 2010 aims to address some of the identified
bottlenecks in LED and the lack of capacity to deliver at the local level. The LRED’s approach aims to build
the capacity of locally based institutions, interest groups and communities, to enable them to act as
effective partners by:
Understanding the local economy.
Identifying community needs.
Developing appropriate responses/opportunities.
Managing integrated regional plans.
Managing local action plans.
Monitoring progress, through learning from experiences.
The EC integrated strategy for promotion of entrepreneurship and small enterprises, 2008 was developed
as “a framework for creating an enabling environment for SMME support, promotion and development”.
The strategy intends to “mainstream Small and Medium Enterprises into the economy of the province,
through opportunities created by the industry, in order to enhance entrepreneurship and self-employment”.
It then presents the following four (4) pillars to achieve the above:
SMME Institutional Framework.
SMME Program Design and Support.
SMME Regulatory Functions and Services.
Monitoring and evaluation.
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EC Strategy and Implementation Plan for Support and Development of Co-operatives, 2008 as developed
by the EC provincial government, through the Department of Economic Development Environmental Affairs
and Tourism (DEDEAT). This strategy identified the following key pillars:
Institutional Capacity for supporting Co-operatives in the province.
Support Infrastructure for Co-operatives Development.
Building an independent Co-operative Movement.
Research, Knowledge and Database Management and Statistics.
ORTDM LED Strategy, 2014 developed in terms of the Municipal Systems Act 32, an act which requires
municipalities to craft IDPs that reflects development priorities and objectives, including local economic
development aims, and a transformation structure of a municipal area, has identified the following
objectives for the economic development of the region.
Intensified promotion of economic diversification and spatial balance.
Exploration and expansion of agricultural value chain.
Leveraged and targeted investment in rural nodes.
ORTDM SMME and Cooperatives Development Strategy and Implementation Plan, 2014 recognizes the
role played by small enterprises in economic development, and aims at guiding the development and
support mechanisms for SMME and Co-operatives, by all stakeholders, such that they can contribute
towards the economic growth indicators of the district, in terms of employment creation and addressing
poverty, for the betterment of the standard of living of the district citizens. The objectives of the strategy are
to:
Boost the municipal institutional support system for SMMEs and Cooperatives development.
Stimulate a strong culture of entrepreneurship in the entire district.
Improve the efficacy, efficiency and sustainability of district SMMEs and Cooperatives.
Escalate the provision of SMME and Cooperatives related support infrastructure.
The NLM Integrated Development Plan (IDP) 2012 – 2016, and the LED Strategy 2012, reflects the
municipalities’ long term vision and its economic developmental objectives. The following strategic focal
areas are identified and targeted for economic development:
Strategic institutional and infrastructural partnerships.
Enterprise Support.
Agriculture.
Tourism.
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The municipality further developed an SMME and Cooperative Development Strategy, to provide an
appropriate environment for the establishment and promotion of self-sustainable SMMEs, which participate
meaningfully in both the first and the second economy of the municipality. The strategy proposed that this
can be achieved by:
Creating a conducive regulatory and institutional environment for SMMEs and Cooperatives
development;
Improving access to finance and business premises;
Improving access to skills, markets and market exposure;
Provision of bulk infrastructure to small businesses.
NLM has also developed sector development plans, in support of the prioritised sectors targeted for
development within the LED Strategy, namely:
Agriculture Sector Plan, 2012.
Responsible Tourism Sector Plan
Significance
It is important that the sector strategy takes cognisance of national and provincial policies and strategic
frameworks so as to achieve decentralized development at a local level, which can be integrated and
coordinated with the strategic imperatives of all the other tiers of government, and further re-enforce and
support national and provincial development targets. These pieces of documents further shape the manner
in which the investment of public funds gets directed into local areas, for overall socio- economic
development.
2.2 Socio Economic Profile The overall development and economic performance of an area is determined by its fundamental socio-
economic characteristics, as this have an impact on potential sector performance. This section will thus
provide a broad overview of the various indicators that will have a bearing on the development of the retail
sector within NLM, and the profile will briefly analyse the following indicators:
Population size, and growth rate;
Age structure;
Gender distribution;
Education levels;
Employment status;
Average household income levels.
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Indicator Overview Significance
Population
size and
growth
According to Stats SA 2011, NLM has a
population size of 290 390, which has been
growing at a rate of 0,57% in the past 10 years.
This presents a potential for the
availability of the labour work force to
support the retail sector.
Age
structure
Approximately 54% of the total population in
NLM is within the working age, with 40,6%
falling between 0-14 years of age, and an
elderly population of 5,4%.
This determines the potential size of
economically active people who can be
available and ready for employment
within the sector.
Gender
distribution
The population in NLM is predominantly female,
with female residents constituting 53,8 %, and
males constituting 46, 2% of the total
population.
The dominance of the female population
should inform the development of
empowerment programmes that can
bring a balance to the ability of women
to access and exploit retail sector
opportunities (as de- facto
breadwinners).
Education
levels
The levels of education in the NLM area is quite
low, with 18, 2% of the population to have no
form of education, and a 35% majority that has
attained primary education, with 15,2% that
have matriculated, and only 4,2 % with higher
qualifications.
Education determines to a certain extent
the type of employment (skills profile),
and employability of the economically
active population, as it can lead to the
availability/unavailability of skilled
workers to support the retail sector.
Employment
status
The area is characterised by high levels of
unemployment, significantly higher than the
national and provincial averages, sitting at
44,8%. A detailed analysis reveals that 55% of
the economically active young people are
unemployed.
This establishes the availability of the
labour pool that can serve as human
resources in support of the sector, as it
would allow local labour to work within
this sector.
Average
household
Income
levels
Household income levels are very low within
the area, with a majority of the households
(25,6%) receiving incomes of between R9 601 –
R19 600, with 17% receiving no income at all.
The strength of the retail sector relies on
a high number of people with disposable
income, which can be used for the
trading transactions.
2.3 Economic Profile
2.3.1 Economic Sector Performance This section will look at the overall local economy in terms of its different constituent economic sectors. The
purpose is to observe the performance of the economy from a sectoral perspective, categorised into the
primary, secondary and tertiary sectors, based on the SIC Economic Activities approach. The table below
shows the detailed breakdown of the various economic sectors and activities.
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Sector Economic Activity % %
Primary Agriculture, Hunting, Forestry, Fishing 3.21 10.87
Mining and Quarrying 7.66
Secondary Utilities 14,5 23,60 Construction 2,47
Manufacturing 18.,20
Tertiary Wholesale and Retail Trade 13.87
65.54 Transport, Storage and Communication 9,02
Financial, Real Estate and Business Services 22,18
Personal and Government Services 20,47
Total 100 100 Table 1: Major Economic Activities (Source: CSIR, 2009)
From the findings above, it emerges that the tertiary sector dominates economic activity in the region,
contributing the highest to the GDP, at 65.54%, with Finance, Real Estate and Business services following
at 22,18, followed by Personal and Government Services. The Wholesale and Retail Sector contributed
13,87% towards the local GDP .
Significance
The primary sector, namely agriculture and mining, are the least contributors to the formal economy of
Nyandeni, contributing 10, 87%, which has got implications on the size and scope of manufacturing activity,
as well as the Wholesale and Retail sector, as it means agriculture and mining products sold through this
sector have to be imported from other areas, outside the municipality.
2.3.2 Retail Sector Analysis This part of the analysis reviews the results of the survey that was conducted within the municipal area in
2014, assessing the scope and size of retail sector businesses that are operating in NLM, in order to have
an understanding of their composition; the challenges they face, development needs, as well requisite
development support. A total of 262 retail sector businesses participated in the study, spread over 14
wards, out of the 31 wards that make up the municipality.
The businesses that were surveyed fell within the retail sector industry, and within the definition of the
SMME category, which also include Informal Traders, and the Cooperatives sector, as defined by the
National Small Business Act, No. 102 of 1996. Below is the presentation of the summarised key findings
from this study.
Indicator Overview
Legal Incorporation 59% of the surveyed trading entities operated “formally registered” business
entities, mostly incorporated as “Close Corporations”, and a few that were
registered as “PTY Ltds”, and some form of “Co-operatives enterprising” in few
respondents. There was a very low percentage of unregistered businesses (16%),
all operating within the Informal Trading Sector, as Hawkers/ Street Vendors.
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Trading area 53% of the respondents traded from fixed premises, and from own business
premises, with 23% that were trading from rented premises.
Number of Business
employees
The majority of the surveyed businesses employed one (1) person, who obviously
was the business owner/ the respective entrepreneur, with the highest number of
employees in some of these businesses being fifteen (15) people, and a few
businesses that employed up to five (5) people.
Employee gender
distribution
A high number of the businesses employed females (51%), with 42% of employing
males.
Employee age
distribution
No respondents were found to employ under age people i.e. below 18 years, which
meant that all retail sector business employees in NLM fell within the legal age
limit, with 51% of the traders employing the middle age bracket of between 36 – 55
years, and 32% employing the youth (18-35 years).
Trading sub-
categories
A high percentage (36%) of the trading activities were found to be falling within the
Fruit and Vegetables sub-category, followed by other trading activities at 19%
(which included a combination of Furniture, Appliances, Equipment etc). General
Dealers made 19%; Clothing and Footwear (9%); and Hardware Stores (7%). The
lowest sub-category was in Jewellery (5%); Cosmetics (5%), and in the
Pharmaceuticals (3%) retail trading activities.
Access to
infrastructure
There were no respondents that cited to have no access to basic and essential
services necessary for their trading activities, with the majority having access to
electricity (36%), followed by access to running water (15%), with access to refuse
removal and storage facilities both equally accessed by 9% of the respondents.
Only 8% of the respondents had access to loading and parking bays, with access
to street lighting being the lowest (7%).
Nationality The majority of the respondents were SA national traders (92%), with only 8%
spread between non - South Africans (3%), and 5% as Foreign Nationals.
Education and skills
levels
59% of the respondents had high school education, with only 6% that have never
attended school.
Knowledge of
available business
support
programmes
A very high majority (94%) of the respondents were not aware of any form of
sector development and business support available from the state and state
entities.
Training support
received
A very high number of the respondents (93%) had never been exposed to any
business related trainings programmes.
Informal Trading
Trends
47% of the responding informal traders operated from fixed and designated
trading stalls, but the majority of those traders (75%) used umbrellas; tables
and chairs, with no access to necessary trading facilities with shelter.
2016 | Nyandeni Local Municipality Retail Sector Strategy Page 21
50% traded from street kerbs, due to the attraction of high volumes of passing
customers in such areas.
The majority operated as emerging or survivalist businesses, generating very
low profit margins, of less than R5 000 turnovers per month.
The majority neither kept financial records, nor had bank accounts, leading to
no access to banking support services necessary for business growth.
Most traders sourced about 68% of their stock from local businesses,
especially those trading in Fruits and Vegetables, including those retailing live
chicken.
Chamber
association/
affiliation
The majority of respondents indicated that they are not members nor affiliated to
any business association /chambers, citing reasons for non – affiliation as; a) not
being aware of any business associations that they can affiliate to; b) have never
been recruited, and c) are not aware of the benefits of becoming members of
business associations.
Other general
challenges
Lack of access to finance.
Lack of access to business related information generally, as well as available
business growth opportunities;
Absence or limited access to markets;
Lack of access to appropriate technology;
Limited opportunities for networking and business linkages;
No access to mentorship and aftercare support.
Significance
It is evident from the survey findings above that the retail sector in NLM confirms the state of the socio-
economic profile of the area (above), the current size and scope of this sector - as measured by its
contribution to the area’s GDP, as well as the infrastructure profile on NLM (as analysed below).
Furthermore, the findings also depicts a sector that is facing huge growth and development challenges,
which prohibit it from addressing the broad socio-economic development needs of NLM.
2.4 Infrastructure profile One of the pre-requisites for unlocking the economic sector development potential is the presence of
economic enabling support infrastructure, which is often a trigger for any potential investment (especially
private sector led investment) within an area. This chapter will assess the status quo of available economic
support infrastructure in NLM, in terms of:
Water services;
Sanitation;
Electricity;
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Telecommunication;
Waste Management;
Road and Transport.
Indicator Overview
Water Services ORTDM has got the function of providing water supply services to NLM, as a Water
Service Authority (WSA). According to Stats SA 2011, the majority (55,5%) of
households in NLM do not have access to adequate clean and piped water, with
68.2% obtaining water from natural sources.
Sanitation The majority of the households in NLM (59,6%) have access to pit toilets, that are
with and/ or without ventilation, with 27,1 having no access to any toilet facilities.
4,1% use chemical toilets, and 2.2% use flush toilets.
Electricity 71% of the population uses electricity for lighting, with 6,9% that do not have any
access to energy sources, and the rest of the population use other energy sources.
Telecommunication The majority (83, 1%) of the population do not have access to the internet, with
12,3% that access it from their mobile phones, and the rest access it from their
homes, work, or elsewhere.
Waste Management The majority of NLM residents use own refuse dumps ( 68.3%), with 55,5% having
no access at all, and only 1,8% having access to pick up refuse removal from the
local municipality ,that is picked up at least once a week.
Road and
Transport
Road transport in NLM involves the N2 from Durban, and the R61 from Mthatha to
Port St John’s, with only 50km of a tarred road, and the rest being gravel roads, that
are mostly in poor conditions.
Significance
The availability of appropriate public sector built support infrastructure creates a conducive environment for
trading activities, reduce the cost of doing business for the private sector, and thus acts as an enabler in
attracting private sector investment towards the retail sector. It also allows for the effective and efficient
transportation of goods between the suppliers and the retailing traders.
2.5 Environmental profile This section maps the natural resource assets of the municipal area, as per NLM’s environmental assets,
given that retail sector development is dependent on the extraction of raw products from the earth, during
primary production. The analysis will briefly focus on the following factors:
Climate;
Topography;
Vegetation.
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An analysis has been made is that the municipal area is considered to generally have good climatic
conditions that are characterised by sub-tropical climates, which are supported by averagely high rainfalls,
with the area’s land cover (topography), vegetation, and environmental sensitivity all posing a potential to
support the development of key economic growth sectors in NLM, namely agriculture, forestry, mining, and
some form of tourism activities.
Significance
Environmental characteristics have got a direct bearing on the economic activity of an area, in terms of
activities within the primary sector, as goods that are extracted from the earth are sold via the Wholesale
the Retail sector, to the business community, or to the final consumers. Furthermore, environmental factors
can also support or create obstacles in the provisioning of enabling economic support infrastructure (e.g
water resources from the area’s wetlands, the transportation of goods etc), which are all requirements for
investing towards sector development.
2.6 Institutional Profile This part of the situational analysis provides an overview of the leadership and management capacity to
plan, implement and support retail sector development within NLM. The analysis will also look at the current
extent, quantity and quality of the relationships between the institutions (internal and external) in the
planning area. The understanding of these institutional matters will enable an assessment of optimal
institutional arrangements, which will enable effective planning, management and the coordination of the
various actors within the municipality to drive retail sector development in the area. The assessment will
therefore look at both current existing internal and external institutions.
2.6.1 Internal Structures
2.6.1.1 LED Unit NLM has institutionalized the administration, management and governance of its economic development
through the “Planning and Economic Development Department”, which is responsible for decision making
in respect of all economic related planning and facilitation matters, as part of the core mandate of local
government. This department further report to the Planning and Economic Development Standing Portfolio
Committee, as a Sub-Committee of the municipal Council. This Committee is entrusted with a responsibility
to advice EXCO and Council on economic development related issues, and further drive the
implementation of the LED Key Performance Area (KPA), within the municipal IDP, together with sector
specific strategies, of which this Retail Sector Strategy will form part.
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The staff compliment of the municipal LED Section/Unit within the Department is presented in the
Organoram below (Figure 2). It can be seen that the unit is well geared to drive Retail Sector development,
as part of broader enterprise development, namely SMMEs (that include both Cooperatives and Informal
Traders), as evident in the provision made for the responsible and relevant officials.
Figure 2: NLM LED Section Organogram
2.6.2 External Structures
2.6.2.1 OR Tambo District Municipality Similarly, as in NLM, the O.RTDM has a similar configuration in terms of the governance, management and
administration of economic development within the district, with a Standing Portfolio Committee for LED as
a sub-committee of Council, as well an administrative function. Both the political and administrative arms
perform similar functions as in NLM, as these are stipulated and guided by the local government legislation.
The O.RTDM has also an LED Forum that reports to Inter-governmental Relations (IGR) structures.
2.6.2.2 LED Forum NLM has also got an LED Forum that acts as “a Platform (institutional arrangement) where local residents
(private organizations, government, state owned entities; Non Governmental Organisations (NGO’s),
Community Based Organisations (CBO’s), traditional authorities) within a particular locality gather, with an
aim to share information and experiences, pool resources and solve problems.” The LED Forum is
expected to play the following roles and responsibilities:
Promote and facilitate partnerships between government, private sector, civil society and organized
labour, for overall economic growth;
Improve Integrated Economic Planning, through broad participation and coordination of key
economic role players (government, business, labor, NGO’s, CBO’s, etc);
Assist to identify and capitalize on local competitive advantage for territorial and sectoral economic
development;
improve the economic performance of the municipality, with respect to all its key sectoral aspects
(Tourism, Agriculture, Retail etc);
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Assist in the establishment of Sector specific Working Groups/ Sub-Sector Forums.
Enhance Enterprise Development and Support;
Assist the municipality in the monitoring & evaluation of economic development activities.
Overview
The institutional configurations for any local area have got an impact on the planning, implementation,
success and failure to drive sustainable economic sector development. The important role that has to be
played by these institutional structures towards driving a common sector development vision, integrated
programmes planning, and the implementation of sector specific strategies within a municipal area, can
thus not be undermined.
3 Conclusion
Having a basic understanding of the socio-economic context is important towards the development of an
effective sector strategy, due to the fact that the success of any strategy requires the identification of the
local areas’ strengths and building on them; realising weaknesses and addressing them; supporting specific
activities to take advantage of available opportunities, and mitigating threats and adverse impacts.
This section will thus assist the strategy development process to transcend towards the framing of the
relevant development vision; objectives; programmes and the priority projects that have to be developed in
order to grow the retail sector in NLM.
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SECTION C
Strategic Framework
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4. Strategic Framework
4.1 Introduction
The strategic framework is a direct response to the status quo of the development context presented in the
situation analysis above, and present means for unlocking retail sector development opportunities, as well
as mitigate the challenges and constraints that have been identified within this municipal area. The purpose
of this section therefore is the crafting of a focussed overarching strategic framework that will set out the
following:
Vision;
Strategic Objectives;
Strategic Programmes, and
Priority Projects/ Initiatives
Below is a brief descriptive summary of each of the strategic framework components
4.2 Vision
Retail sector development forms part of, and gives effects towards both LED, and SMME development,
which are all meant to contribute towards the broad socio-economic development targets that have been
set and approved by the Municipal Council, as stated in the IDP.
Therefore, a separate vision for retail sector development in NLM can NOT be crafted, as it is anticipated
that the achievement of the retail sector development objectives, together with the implementation of
related sector development programme and projects, will all add value towards the achievement of the
SMME and Cooperatives development vision of the municipality, which in turn is meant to ensure the
achievement the municipal LED vision, which has to ultimately achieve the broad development vision, as
set by the municipal Council..
The IDP, LED and SMME and Cooperatives development visions that have thus been crafted and
approved, are as follows:
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Municipal Vision
“A well governed place of opportunities characterised by integrated-employment -creating economy and
sustainable functional urban and rural centres for better livelihoods”
LED Vision
“A self-sustaining and vibrant economy that supports sustainable rural livelihoods through coordinated
community-anchored development”
SMME and Cooperatives development Vision
“Nyandeni Municipality to grow and develop the employment and GDP contribution of SMME sector and to
bridge the gap between the second and the first economies in the process;
And to facilitate the establishment of self-sustained cooperatives in variety of economic sectors that will
generate income, create employments and liberate people from poverty”
4.3 Strategic Objectives
In order to meet the SMME and Cooperatives development vision stated above, the following four (4) key
strategic objectives will need to be achieved:
Build an efficient municipal governance support system for effective retail sector development.
Strengthen collaboration and networking between retail sectors businesses in NLM.
Improve the provision of basic services and critical catalytic infrastructure.
Stimulate and grow thriving retail sector businesses.
4.4 Strategic Framework Matrix
Below is the matrix that shows the strategic objectives (SO), with related strategic programmes (SP) and the
priority projects/ initiatives that will need to be implemented in order to stimulate the growth of retail sector
businesses in NLM:
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4.5 Priority Project/Initiatives
This section will provide a brief descriptive summary of the priority projects that have to be undertaken
during the implementation of the strategy. The successful implementation of these projects will build on the
sector strengths; address current weaknesses; take advantage of opportunities for development that exist
currently or in the foreseeable future; and mitigate against the impact of possible threats.
It has to be noted that there are strong linkages and interdependencies between some of the individual
projects that have been identified, with the implementation of one, serving as an input, for another output of
one project. These projects have also been identified and selected based on the following criterion that is
graphically and briefly explained below:
Figure 3: Summary Project selection Criteria
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Criteria Description
Relevance The relevance of the project to the needs and constraints of the local community area,
the provincial and national government developmental targets
Viability There will be demand with a potential for growth in the market, which will enable the
generation of adequate revenues/ income to cover project implementation costs.
Impact Positive primary and secondary long-term effects that will be produced by the project,
directly or indirectly, intended or unintended, on the targeted local communities.
Sustainability The likelihood that the positive effects of the project will persist for an extended period
once initiated and implemented, financially and institutionally.
4.5.1 Project Summaries
Strategic
Objectives #1
Strategic
Programme # 1.1
Projects
Build an
efficient
municipal
governance
support
system for
effective retail
sector
development.
Institutional and
Organisational
Development
Project # 1.1.1 Human Resource Capacity Development
Rationale
Municipalities are mandated to facilitate social and
economic development within municipal spaces, and the
relevant LED Departments/ Unit has to take responsibility
for the development of local economies, focusing on the
local key growth sectors that pose a development potential.
The set of skills attributes, with the capacity profiles of the
relevant human resources personnel (administrative and
political) within a municipality that carry this function, can
either hinder or advance successful socio-economic
development, and further provide a foundation for overall
municipal economic growth. Improving the competencies of
relevant personnel in retail sector development can thus
enable the successful coordination of the implementation
of the retail sector strategy, in a manner that maximises
overall economic development.
Brief Description This entails the provision of continuous and ongoing skills
and capacity development programmes to the relevant
human resource in:
Sector development facilitation, planning, and
programming, broadly.
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An understanding of retail sector, as a sub-sector
within the tertiary sector, and how it links or
connects to other industry sectors (primary and
secondary sectors)
Fundraising and mobilizing the necessary human,
physical and financial resources for the
development of the sector.
Monitoring the impact of the retail sector within
the municipal area.
Project # 1.1.2 Sector Research and Knowledge Management
Rationale
Local level retail sector analysis is an important ingredient
for long-term strategy building, planning and
implementation, in terms of assessing the performance,
nature and structure of the retail sector. Conducting an
analysis of the strengths, weaknesses, opportunities and
threats within the sector, can serve to highlight key issues
and opportunities facing the local economy, which can
further guide the design, approach, and the implementation
of any sector development programmes/projects.
Brief Description This is about continuosly collecting baseline data on the
performance of the retail sector in the municipality; in order
to create an informed sector profile in the local area, which
can highlight the basis of the comparative and competitive
advantage in retail trade, in relation to neighbouring areas,
in the region, provincially and nationally. This should entail
the following activities:
Audit local social; natural physical; human, and
financial resources.
Identify and update retail sector industry profiles,
for incorporation within the municipal LED plan.
Develop value chains, backward and forward
linkages, complementarily, and clustering,
necessary for growing the local economy broadly.
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Project #1.1.3 Supportive Retail Sector Municipal Land Use Management
Policies and By-Laws
Rationale
Supportive municipal policies and by-laws that favour local
enterprises (formal, informal and cooperatives) promote
and advance the development of local enterprises; support
local product; create new jobs; and sustain jobs already
created by local businesses. These policies also tend to
ensure business attraction and retention, and reduce the
impact of the importation of products from outside the
municipality, which results to economic leakages in the flow
of the market system.
Brief Description This requires the municipality to develop and promote land
use management plans, policies and by-laws that will make
it attractive for both external and internal investors to open
and operate retail sector businesses in NLM.
Strategic
Objectives #2
Strategic
Programme # 2.1 Projects
Strengthen
collaboration
and
networking
between retail
sector
businesses in
NLM
Chamber
Development and
Associational
networks
Project # 2.1.1 Retail Sector Forum Development and Support
Rationale
Supporting the retail sector to form voluntary, unified
and member - based associations will assist individual
businesses to be unified and speak under one voice;
advocate for, and further members’ collective business
interests; strive to ensure future prosperity via a pro-
business climate, and reduce transactional fiction through
well functioning networks. These associations will become
effective in enhancing engagements between the
membership base, and the municipality, and with all other
relevant stakeholders.
Brief Description The project should entail supporting the formation and
the development of a retail sector chamber/associations,
which should also become part of the LED Forum, and can
have the following components under its wing, given the
different nature of the challenges and needs of each:
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Formal Retail Sector Business Sub- Association/s;
Informal Trade/Hawker Association/s, and
Local Co-operatives Forum.
The retail sector association/s should thus be encouraged
to get affiliated to any existing regional business
association/s like NAFCOC, etc.
Project # 2.1.2 Networking and Information sharing
Rationale
Networking enables the sharing of information; best
practise models; learning encounters, and sharing of
experiences between the individual businesses, for
successful enterprising, given that businesses (both large
and small) often operate in isolation from each other. This
will further enhance the retail sector business sub-
association/s.
Brief Description The project should involve organising regional sectoral
networking workshops and seminars, and these can take
any form, as long as they would achieve the outcome of
networking and information sharing between retail sector
businesses. This should include continuous knowledge
dissemination about “Retail”, as a sector, and how it links
with other economic sectors; include facilitating and
providing support in attendance of outside seminars;
conferences and study tours, by local businesses.
Strategic
Objectives #3
Strategic
Programme # 3.1 Projects
Project # 3.1.1 Investment in hard infrastructure
Rationale
A key resource in business development is infrastructure.
Businesses cannot function without access to reliable
“hard” infrastructure. Infrastructure acts an enabler for
development; reduces the costs of doing business for the
private sector; improves the physical business
environment, and makes the area attractive for business
attraction, retention, expansion and recruitment.
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Improve the
provision of
basic services
and critical
catalytic
infrastructure.
Business Enabling
Support
Infrastructure
Brief Description The project should be about ensuring that appropriate,
user-friendly and fully functional infrastructure exists to
promote sector development. This means that electricity,
water and sanitation services, refuse removal,
telecommunication, and transport infrastructure are
provided and available to retail sector businesses, as an
integral part of the ability of the economy to function
well, and grow.
Project # 3.1.2 Investment in Sites and Premises
Rationale
Closely aligned with hard infrastructural needs is the
availability of sites and premises for retail sector
businesses to operate. Local government also plays a key
role in deciding on land use management, regulating land
use, and spatial planning. The municipality, provincial
(ECDC), and national government (DPW), are often
significant owners of industrial and commercial land and
property, and are in a strong position to use these
resources to encourage business investment and
expansion. A good understanding of the local property
market can thus enable a municipality to plan for Retail
Sector growth.
Brief Description This requires the auditing/survey of public land and
industrial sites/ buildings, which can be released,
developed, and improved for use by the retail sector
businesses in NLM. This can enable investment attraction
from commercial property developers to host national
franchises, and other chain stores/retail outlets, that can
come and operate in the municipality. Decisions will need
to be made on which public sites and buildings can be
effectively reused cost efficiently. In some instances, state
owned redundant buildings can be adapted /sub - divided
for use as smaller workspaces by the local retail trading
business community e,g Cooperatives entities, and as
industrial/business parks.
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Strategic
Programme # 3.2 Projects
Trading Support
Infrastructure
Project # 3.3.1 Informal Trade Shared Economic Infrastructure Facility
Rationale
In a rural base economy like NLM, economic growth is
not only determined by the formal economy (the
economic sector that is legally registered and pay
taxes), but also by the informal economy (whose
activities are not legally registered). It has been
researched in SA that in rural base economies, the size
of the informal economy can be greater than the formal
economy. This sector also interacts with the formal
economy by supplying certain goods and services. The
linkages between the formal and informal sectors of the
economy therefore need to be understood, developed
and supported, to also enable this sector to gradually
move to a level of the formal economy.
Brief Description The project should be about the leveraging of public
sector investment that would provide the necessary
infrastructure, by creating an enabling environment for
informal businesses to crowd-in investment in the inner
city, and around nodal areas, where there is clear
business activity taking place. The shared infrastructure
can be:
Warehouse/storage facilities;
Shelter/ stalls for trading area of vendors;
Cold storage for common use;
Child care facility for traders;
Business Industrial facilities, and
Any other form of business infrastructure that is
needed by the Informal Trade Sector.
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Project # 3.3.2 Ward/ Village Based Cooperatives Wholesale Trading
and Marketing Hubs
Rationale
Co-operatives have a long and successful tradition
around the world and nationally, and have proven to
contribute to rural communities in terms of social,
cultural, human and economic development. In contrast
to other forms of business, co-operatives tend to
mobilise and integrate more people as community
members into the mainstream economy. While
businesses that service markets in urban centres tend to
be more competitive, rural areas tend to be
underserved. This is caused by a multitude of reasons
that tend to increase the costs of doing business (due to
distance, remoteness of markets etc), and poor road
networks.
Brief Description The project is about enabling community led
enterprises to have access to appropriate facilities from
which they can undertake trading and marketing
activities. This would also enable the meeting of buyers
with the local or village sellers, for exchanging the
goods produced/sold. The following approach can be
pursued:
Partitioning of community halls that each
village/ward has access to, where projects that do
not require big facilities for trading activities can be
undertaken from e.g groceries shops; fruit and
vegetables shops; arts and craft products, etc.
Construction of new facilities within the land that is
communally owned by the community.
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Strategic
Objectives #4
Strategic
Programme # 4.1 Projects
Stimulate and
grow thriving
retail sector
businesses.
Financial Support
Project # 4.1.1 Sector Development Financing Instrument (SDFI)
Rationale
Access to funding can enable retail sector businesses to
address their funding needs, like start-up capital – for
stock; equipment; materials; marketing; office set up;
working capital - to ensure proper cash flow
management; widening asset bases - such as purchasing
new and bigger machines or equipment; expansion –
for increasing output and use up idle capacity.
Brief Description The project can involve:
Developing and administering a municipal SDFI.
Approaching credit providers and donor funding
institutions nationally, provincially and locally
(Government Departments, SOEs, NGOs, and
private funders), so as to house and manage
the disbursements of their business finance,
and even co-fund their respective financing
instruments to the benefit of local retail sector
businesses.
Approaching medium and big businesses in
NLM to finance start-up and emerging sector
businesses, within their BB-EEE score cards.
Project # 4.1.2 Financial Savings and Credit Schemes
Rationale
The project will also address the challenge of access to
funding, where local retail sector business can device
means of addressing their own challenges, through
implementing “traditional” practises of saving as a
group (namely stockvels/imigalelo). It will also inculcate
and strengthen a culture of group savings and social
cohesion, including conformity and compliance with
own established group savings and credit regulations.
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Brief Description The initiative should be structured such that businesses
with similar interests (e.g Informal Traders,
Cooperatives, etc), and/or business individuals that
know each very well, are persuaded to come together
and establish savings and credit schemes, to ultimately
finance their individual business needs. Co-operatives
enterprises currently receive support from government
for the establishment of Financial Services Cooperatives
(FSCs), which gets affiliated to the Cooperatives
Development Bank Agency, and the Agency also
provides requisite capacity development, including seed
capital, to kick start such initiatives.
Strategic
Programme # 4.2 Projects
Non Financial Support
Project # 4.2.1 Sector skills development
Rationale
From time to time, small businesses encounter problems in
managing their business and financial affairs, effectively;
which leads to constant failures of businesses, at their first
three to five years of starting up. To curb this, targeted
training programmes should be developed in partnership
with all government agencies that provide small business
development and support services e.g SEDA, ECDC, NYDA,
W&R Seta, etc, to address critical sector skills shortages.
Brief Description Under this project, training of the Formal and Informal
Businesses, as well as Co-operatives Enterprises need to be
conducted in general understanding of Retail, as a sub-
sectors; technical, vocational, entrepreneurial and general
management skills that should include, amongst others:
Office Administration; Financial management; Sales and
Marketing; Problem solving and Decision-making;
Customer Care; Quality Management; Health and Safety;-
Tendering; Exporting; Conflict Management, and Specialist
technical knowledge for specific economic sectors.
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Project # 4.2.2 Access to information
Rationale
Once of the challenges faced by business, generally, is
access to business related information, together with all
the available business development and support services
provided by the state and state entities, as well as support
provided by the private sector, and NGOs.
Brief Description Organise and invite relevant government departments,
state agencies, private and NGO role players to SMME
information sharing sessions, to come and share existing
and available relevant business development and support
services, which local retail sector businesses can tap into.
This should also involve leaving information booklets,
flyers, brochures, and /or business cards with the
municipality for distribution to the local retail trading
business community.
Project # 4.2.3 Access to markets
Rationale
Access to more markets will stimulate product demand,
enhance access to local and external markets, improve
general access to markets, and thus increase the
profitability levels of local retail sector businesses, resulting
to sustainable enterprising. Access to more markets can
further results to a gradual growth of the retail sector
businesses, from micro, to small, medium and later, to
large businesses.
Brief Description The project should be about:
Encouraging medium and big retail sector
businesses to buy from local small and emerging
retail sector businesses, whilst assisting them with
their product quality, as part of Supplier
Development, within their BB-EEE Score-cards.
Hosting Trade Fairs/ Flea Markets/ Market days or
Shows, at which retail sector businesses can be
able to display and promote their products.
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Facilitation of export opportunities to enable
participation in Trade Delegations and
International Trade Fairs, and other Marketing
Events, nationally, provincially and locally.
Project # 4.2.4 Mentorship
Rationale
It has been observed over years, that mentorship has the
ability to empower the Mentee, through skills transfer,
thus reducing business failure rate, and ensure business
success. It is for this reason that mentoring becomes
critical, as it can improve the operational effectiveness of
local retail sector businesses in NLM.
Brief Description The project will focus on building good relations with the
retail sector business chambers/ associations in order to
tap into the expertise of their well experienced member
businesses, so as to provide one-to-one mentorship, to
small and emerging entrepreneurs within the sector.
The mentorship programme should run for a specified
period of time, preferably up to six months, with periodical
monitoring and evaluation. The municipality can develop
an incentive scheme to reward the mentoring businesses,
or even seek sponsorships/donation from other
stakeholders from the public and the private sector,
towards such an incentive scheme.
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SECTION D
Implementation Plan
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5. Implementation Plan This section lays out the hierarchy of actions that need to be implemented in order to effectively achieve the strategy, with budget estimates, clearly outlined
sources of funding, responsible implementing parties/partners, as well as the implementation timeframes. The implementation plan should serve as an
integrated programming document to maintain clarity of the proposed strategic direction, and ensure that programs and projects do not inappropriately
compete for resources and support. With a timeframe of between one and three years, a good implementation plan will result in a more efficient and effective
use of available budgets, and can be used to attract funding from external sources, such as governments, SOEs, the private and NGO sector..
No Project/ Initiative Sources of funding Estimated Budget Implementing
Partners
Implementation
Timeframe
NLM State SOE Private HEIs/
SETA
NGO 16/17 17/18 18/19 19/20 20/21 16/17
17/18
18/19
20/21
21/22
1 .Human Resource
Capacity
Development
√ √ √ √ √ √ 1 000 000 1 250 000 1 500 000 1 7500 000 2 000 000 NLM, ORTDM, Cogta, SALGA, LG-SETA
√ √ √ √ √
2 Sector Research &
Knowledge
Management
√ √ √ 300 000 350 000 400 000 450 000 500 000 NLM, ORTDM, NTINGA, Cogta, ECSECC
√ √ √ √ √
3 Supportive Retail
Sector Municipal By-
Laws
√ √ √ 50 000 60 000 70 000 80 000 90 000 NLM, National Treasury, COGTA, SALGA
√ √ √ √ √
4 Retail Sector Forum
Development &
Support
√ √ √ √ √ √ 100 000 150 000 200 000 150 000 200 000 NLM; ORTDM; Eskom; DPW, DOT, Telkom, SANRAL; ECDC; DEDEAT NYDA; DoSD; DPW; SEDA; WSU;SETAs
√ √ √ √ √
2016 | Nyandeni Local Municipality Retail Sector Strategy Page 43
5 Networking &
Information sharing
√ √ √ √ √ √ 100 000 150 000 200 000 150 000 200 000 NLM; ORTDM; ECDC; SEDA NYDA; Business Chamber
√ √ √ √ √
6 Investment in Hard
Infrastructure
√ √ √ 3 000 000 5 000 000 8 000 000 12 000 000 18 000 000 NLM, ORTDM, NTINGA, Eskom, DEA, DPW, DOT, Telkom, SANRAL
√ √ √ √ √
7 Investment in Sites &
Premises
√ √ √ √ 5 500 000 6 000 000 6 500 000 7 000 000 7 500 000 NLM,ORTDM, NTINGA, ECDC, DPW
√ √ √ √ √
8 Informal Trade
Shared Economic
Infrastructure Facility
√ √ √ 10 000 000 12 500 000 13 000 000 13 500 000 14 000 000 NLM,NTINGA; ORTDM, DSBD
√ √ √ √ √
9 Ward/ Village Based
Cooperatives
Wholesale Trading
and Marketing Hubs
√ √ √ √ 5 500 000 6 000 000 6 500 000 7 000 000 7 500 000 NLM,ORTDM, DRDLR; W&R SETA
√ √ √ √ √
10 Sector Development
Financing Instrument
√ √ √ 10 000 000 12 500 000 13 000 000 13 500 000 14 000 000 NLM, ORTDM, NTINGA,SEFA; IDC, DSBD, DTI, ECDC, DEDEAT NYDA
√ √ √ √ √
11 Financial Savings
and Credit Schemes
√ √ √ √ √ 3 000 000 3 500 000 4 000 000 4 500 000 5 000 000 NLM, ORTDM, NTINGA,SEFA; IDC, DSBD, DTI, ECDC, DEDEAT, ECRDA, NYDA, Business Chamber
√ √ √ √ √
12 Skills Development √ √ √ √ √ √ 10 000 000 10 500 000 11 000 000 11 500 000 70 000 000 NLM, ORTDM, NTINGA,
√ √ √ √ √
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DSBD, DTI, ECDC, NYDA, SETAs, WSU
13 Access to information √ √ √ √ 1 000 000 1 250 000 1 500 000 1 7500 000 2 000 000 NLM, ORTDM, NTINGA,SEFA; IDC, DSBD, DTI, ECDC, DEDEAT, ECRDA, NYDA, Business Chamber/s
√ √ √ √ √
14 Access to markets √ √ √ √ √ 1 000 000 1 250 000 1 500 000 1 7500 000 2 000 000 NLM, ORTDM, NTINGA,SEFA; IDC, DSBD, DTI, ECDC, DEDEAT NYDA, ECRDA, Business Chamber/s
√ √ √ √ √
15 Mentorship √ √ √ √ 1 000 000 1 250 000 1 500 000 1 7500 000 2 000 000 NLM, ORTDM, NTINGA,SEFA; IDC, DSBD, DTI, ECDC, DEDEAT NYDA, Business Chamber/s
√ √ √ √ √
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SECTION E
Institutional
Framework
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6. Institutional Framework Establishing and maintaining both formal and informal links with all the key stakeholders can support the
implementation and monitoring of this strategy, and therefore build working relationships and trust between
all the strategic partners of NLM. It can assist in the process of managing perspectives and differing
agendas, during the implementation of this strategy. It is proposed that both internal and external
implementation mechanisms should be utilized during the implementation of the strategy.
6.1 Internal implementation mechanisms
Retail sector development is implemented within the broad objectives of LED. The White Paper on Local
Government (1998) notes that LED is about creating a platform and environment where investment and
entrepreneurship thrives. The White Paper further states that: “Local Government is not directly responsible
for creating jobs. Rather, it is responsible for taking active steps to ensure that the overall economic and
social conditions of the locality are conducive to the creation of employment opportunities”. This includes
creating an enabling environment for businesses to grow. This effectively means that the role of the
municipality is more of ‘facilitating’ the creation of a conducive environment for businesses to grow.
Taking this into consideration, the municipality has one position for an LED Officer (SMME) within the
Planning and Economic Development Department, a department that is considered to be the main nerve
centre representing the internal structure for the co-ordination and promotion of SMMEs within NLM, which
will be responsible for all the coordination activities required for implementing the Strategy. Within this
department, the LED Officer, under the supervision of the LED Manager, will be required to oversee the
successful implementation the strategy. He/she will be charged with a number of tasks, including
developing and refining the projects, and providing strategic and technical development for each of the
projects to be implemented in the strategy. He/she will need to identify, appraise and undertake liaison with
other potential resources in fulfilment of the strategic objective, and should have the skills to plan and direct
project workflow on a day-to-day basis. In assessing and reviewing the progress of the strategy against the
Implementation Plan, he/she will be expected to report as required to internal and external parties, and
should therefore be able to develop effective professional partnerships with all of key stakeholders.
.
6.2 External Stakeholders
To ensure co-ordination and integration of enterprise development into the objectives of different role
players in government, across spheres, and civil society at large, the municipality maintains on-going
relations with external stakeholders. Below is the list of some of the institutions that can assist the
municipality in the implementation of the strategy, and most of these are proposed such that they can either
be initiated, or strengthened, as part of retail sector development within NLM.
District Municipality (O.RTDM) will provide the following support during the implementation of the strategy:
Provide overall support during the implementation of the identified priority projects/initiatives.
Build the capacity of the relevant personnel in NLM.
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Network with all relevant stakeholders nationally, provincially and locally, as a way of identifying and
mobilizing both financial and non-financial resources for the implementation of the strategy.
Liaise and lobby all relevant departments within O.RTDM towards contributing requisite resources
necessary for the implementation of this strategy.
District Development Agency (Ntinga): The mandate of the agency is the promotion and facilitation of
socio-economic development of the rural region, prioritizing primary agriculture and agro processing;
manufacturing, value adding and beneficiation; tourism and mariculture; green economy; forestry; small
towns revitalization; development, support and sustainability of SMME and Co-operatives, and the
promotion of trade and investment.
LED Forum: The LED Forum, as a platform (institutional arrangement) where residents (community
representatives, private organizations, government, NGO’s, CBO’s, traditional authorities, the private
sector) within a particular locality gather, should aim to share information and experiences, pool resources,
and collectively find solution to problems towards building the local economy, thereby creating jobs and
fight poverty. The forum therefore should be able to involve and engage as many community-based
structures as possible, in order to mobilise social capital for the implementation of the strategy.
Business Chamber/Associations: Business associations, including chambers of commerce and trade
associations, contribute to economic growth, development, and prosperity. This structure should play a key
role in building an inclusive entrepreneurship eco-system for sector development, such that retail sector
businesses are able to grow and create jobs. Through these associations, the private sector can voice
legitimate, needs while engaging government in transparent policy reform processes. The business
association is often structured into sub-sectors, and the retail sector should become a key component of
this association.
Hawkers/ Informal Trade Association: Informal traders will need to lobby all relevant stakeholders, so as to
ensure that government realizes its commitment to this previously disadvantaged sector group. If traders
are not organized, and thus not in a position to put pressure on local government, resources for the
implementation of this strategy are unlikely to be allocated to them. They will have to lobby for trading
space to be factored into town developments, and for the redesign of existing areas where trading occurs,
e.g. broadening of pavements, creating pedestrian walkways, and the provision of shelters etc.
Co-operatives Forum: The Forum will work as a networking platform for co-operatives, which should
represent and advocates co-operatives member interests. For it to be effective, it will need to be formed
through a bottom up and organic process, not as a result of a government initiatives, with government only
providing technical and other support.
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SECTION F
Monitoring
&
Evaluation
Framework
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7. Monitoring and Evaluation Framework Monitoring and evaluation (M&E) is a key component of any strategy implementation. Indicators should be
clearly laid out at the project level to measure inputs, outputs, outcomes, and impact for each project.
These will be consolidated to determine program success, and provide an overall assessment of the
strategy. Repeated semi-annual and annual meetings to discuss results will become necessary as part of
an on-going planning and learning process. An independent audit of key indicators through repeated
municipal and business surveys is crucial to measuring the progress made since the baseline of the local
economy (retail) assessment, and these can be quantitative and qualitative in nature.
Monitoring is the continuous assessment of a strategy and/or project implementation in relation to agreed
schedules, and of the use of inputs, infrastructure, and services, by project beneficiaries. Monitoring
provides managers and other stakeholders with continuous feedback on implementation. It identifies actual
or potential successes and problems early, to facilitate timely adjustments to project operation. Monitoring
accepts the project design as given; measures progress; is focused on performance, and occurs
continuously.
In other terms, monitoring means to “observe”, or to “check performance.” Monitoring is a continuous
process of collecting information, using indicators to gauge the process or project. Regular monitoring
allows the timely identification of successes or failures. There are two common forms of monitoring:
Compliance monitoring: which ensures that what was agreed upon is actually done (e.g., the
municipality will upgrade road X).
Impact monitoring: which gauges the impact of actions in relation to the objectives (e.g., the
upgrade of road X benefited the movement of goods in and out of a particular village, to the urban
market, resulting in ten new transit-related jobs).
Evaluation is the periodic assessment of a project’s relevance, performance, efficiency, and impact (both
expected and unexpected), in relation to stated objectives. Project implementers/managers undertake
interim evaluations during implementation, as a first review of progress; a prognosis of a project’s likely
effects; and as a means of identifying necessary adjustments in project design. Evaluation challenges the
design of a project, draws conclusions and makes judgments, is focused on the effectiveness of the
program or project, and becomes a key milestone in the project cycle
Evaluation therefore uses the information from monitoring to analyze the process, programmes and
projects to determine if there are opportunities for changes and improvements. Evaluation, like monitoring,
should promote learning. In the implementation stage of any strategy, evaluation is used to determine if the
actions are meeting the strategic objectives, efficiently, effectively and/or at all.
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7.1 Why Monitoring and Evaluation?
A well-designed monitoring and evaluation system will help answer the question ‘how do I know
when I have reached my objectives?’
It provides a basis for accountability in the use of resources.
Used carefully at all stages of the project cycle, monitoring and evaluation can help to strengthen
strategy and project design, and implementation.
It helps to build trust with businesses, financial institutions and investors, by openly sharing results.
The emergence of recorded benefits early – on, helps reinforce ownership and early warning
learning by all regarding emerging problems, and allows action to be taken before costs rise.
A well-designed M&E allows for mid-course corrections.
A reliable flow of M&E information during implementation enables managers to keep track of
progress, and to adjust operations to take account of experience.
It allows for the interventions to be adapted to reflect the changing needs of target businesses,
sectors and companies.
It provides important information on how to use limited resources more efficiently, by directing
investments to programs and activities that have the greatest impact on productivity, job growth or
investment.
It allows for the benchmarking of sector development interventions against examples of good
practice.
It demonstrates the impact of sector development interventions towards overall economic
development and growth.
It can help to justify budget requests for further retail sector development interventions.
7.2 Summary difference between Monitoring & Evaluation
MONITORING EVALUATION
What Monitoring is the process of routinely
gathering information on all aspects of a
project or program. It is used to inform
decision making on project implementation.
Evaluation involves a stepping back to gain a
deeper perspective on what effects and
impacts have been achieved. It informs
decision-making.
Purpose Analyse the current situation.
Identify problems and find solutions.
Discover trends and patterns.
Keep program activities on schedule.
Measure progress towards intermediate
goals, and revise action in order to
achieve these goals.
Determine how effective a project or
program has been.
Determine the extent to which goals have
been achieved.
Learn how efficiently things are being
done.
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Formulate key questions.
Make decisions about human, financial
and material resources.
Develop “lessons learned” so future
programs and projects of a similar nature
can be improved.
When Monitoring is continuous (daily, monthly,
and annually). Monitoring activities should
be scheduled as part of the projects work
plan, and be a routine part of project
implementation.
Evaluation is conducted periodically:
At or near the mid-point of
implementation.
At the end of a project.
At a point well after a project has been
completed (3-10 years).
How Monitoring can be carried out by staff and
participants through field visits, review of
service delivery, and through a
Management Information System.
Internal evaluation can be carried out by the
project manager and/or project staff and
participants. External evaluations are
generally conducted by external consultants,
external agencies, or donors.
Why Monitoring provides managers with
information needed to analyse the current
project situation, identify and find solutions,
discover trends and patterns, keep in
schedule and measure progress towards
expected outcomes. It allows an opportunity
to make decisions regarding human,
financial and material resources, and
minimize needless program costs.
Evaluation is the formal process of
documenting the following project
achievements:
Progress in the work plan.
Establishment of systems.
Implementation of planned activities.
Achievement of the goals.
Effectiveness of the project.
Impact of the project.
Efficiency or cost-effectiveness.
Information
Type
More emphasis on quantitative data, but
some qualitative data is gathered to
contextualise the quantitative analysis.
More emphasis on qualitative data, but
quantitative data is gathered in indicators.
Qualitative analysis can often support the
quantitative assessment.
Information
Category
Descriptive, analytical and documentary
data should all be used to observe the
“what”, and understand the “why” of the
project activities.
Descriptive, analytical and documentary data
should all be used to observe and record the
“what”, and understand the “why” of the
project achievements.
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M &E FRAMEWORK
Strategic Objectives Strategic Programmes Priority Projects/Initiatives
Objectively Verifiable Indicators of Achievement Sources and Means of Verification
Build an efficient municipal governance support system for effective retail sector development.
1.1 Municipal Institutional Development
1.1.1 Human resource capacity development
Number of training sessions held Number of officials and politicians trained
Training Manuals Training Reports
1.1.2 Sector Research and Knowledge Management
Number of Retail Sector Industry Profiles developed/ Updated
Number of Sector Value Chains & Clusters Developed
Sector Industry Profiles Value Chain Analysis Report Cluster Development Reports
1.1.3 Supportive Retail Sector Municipal Land Use Management Policies and By-Laws
Number of Land Use Management Plans, Policies and By-Laws developed and approved by Council
Land Use Management Plans, Policies and By-Laws
Strengthen collaboration and networking between Retail Sector businesses in NLM
2.1 Chamber Development and Associational networks
2.2.1 Retail Sector Forum Development and Support
Formal, Informal and Cooperative Enterprise Retail Sector Sub - Associations/ Chambers established, capacitated and supported
TORs for Retail Sector Sub- Associations/Chamber
Training and Meetings Reports
2.1.2 Networking and Information sharing
Number of Retail Sector Business Networking and Information Sharing Sessions Held
Meetings and Workshop Reports Attendance Registers
Improve the provision of basic services and critical catalytic infrastructure
3.1 Business Enabling Support Infrastructure
3.1.1 Investment in hard infrastructure
Rand Value invested in Hard Infrastructure Infrastructure Profile
3.1.2 Investment in sites and premises
Number public land & industrial sites/ buildings audited/surveyed, released, developed & improved
Number public land & industrial sites/ buildings partitioned/re-sized & used by Retail sector businesses
Audit// Survey Reports PPP agreements/SLAs Lease Agreements
3.2 Trading Support Infrastructure
3.2.1 Informal Trade Shared Economic Infrastructure Facility
Number of Informal Trade Business accessing Trade Shared Economic Infrastructure Facilities
Business Plan Financing Agreements/ SLAs Progress Reports
3.2.2 Ward/ Village Based Cooperatives Wholesale Trading and Marketing Hubs
Number of Cooperatives Ward / Village Based Trading & Marketing Hubs established and operational
Business Plan Financing/ Lease Agreements/ SLAs
Stimulate and grow thriving Retail Sector businesses.
4.1 Financial Support
4.1.1 Sector Development Financing Instrument
Rand Value of SDFI committed by NLM Rand Value of finance secured for the retail sector
industry in NLM from government DFIs and Number of retail sector businesses supported and
accessing retail sector business finance
NLM Retail Sector Development Annual Financing Budget
Retail Sector Financing Partnership Agreements/ SLAs
4.1.2 Financial Services Cooperatives
Number of FSCs established and supported Number of Retail Sector businesses accessing finance
FSC Constitutions Progress Reports
4.1 Non Financial Support 4.1.1 Skills Development Number of Retail Sector Businesses trained Training Reports
2016 | Nyandeni Local Municipality Retail Sector Strategy Page 53
Attendance Registers
4.1.2 Access to information
Number of Retail Sector Businesses with access to development sector information
Workshop Reports Attendance Registers
4.1.3 Access to markets
Number of Retail Sector Businesses accessing additional markets for their products
Signed Off - Take Supply Agreements
4.1.4 Mentorship
Number of Retail Sector Businesses mentored for enterprise success
Mentor/ Mentee Agreements Mentorship Reports
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7.3 Monitoring and Evaluation Framework Checklist
Yes No Action
Pre-implementation
Step One: Confirm objectives /expected outcome and outputs
Have objectives been developed to show what the intervention is trying to
achieve?
Are outcomes in place to show what the final achievement of the
intervention will be?
Step Two: Establish outputs for the intervention
Have outputs been established to show what tasks are being carried out to
achieve the outcomes?
Step Three: Establish performance indicators and starting baseline
Have performance indicators been established, taking into account data
availability, surrounding environment and underlying trends of the local
area?
Has a starting baseline been established?
Step Four: Identify data to be collected
Has the source of data been identified to calculate the performance
indicators?
Do the data need to be collected?
Have the data been checked for accuracy and reliability?
Is extra work required to format the data for analysis?
Step Five: Identify methods of gathering data
Have the methods of data collection been agreed?
Have appropriate analytical methods been agreed?
Have statistical specialists been employed to complete the analysis?
Step Six: Formulate a timetable for implementation
Has an implementation timetable been formulated to ensure the intervention
runs and finishes on time?
Have milestones for key activities of the intervention been established?
Have milestones for regular review of the inputs and outputs been
established?
Step Seven: Estimate the costs of planned inputs
Have the input costs been estimated to enable the analysis of cost-
effectiveness of the intervention?
Step Eight (Optional): Identify a comparable area
2016 | Nyandeni Local Municipality Retail Sector Strategy Page 55
Has a comparable area been identified to ensure any changes are a result
of the intervention?
Yes No Action
Implementation
Step Nine: Implement intervention and gather data
Has a contingency plan been organised?
Have operational rules been written and sent to all the strategic partners?
Step Ten: Monitor progress
Are the inputs being monitored?
Are the output and outcome data being monitored?
Are the key milestones being monitored?
Yes No Action
Post-implementation
Step Eleven: Analyse data
Have the outcome data been compared with baseline?
Has the cost-effectiveness of the intervention been calculated?
Have the costs of the intervention, including any inputs monitored during the
intervention been calculated?
Has the comparable area been examined?
Have the trends in the wider area and any similar comparison area been
examined to assess the impact of the intervention?
Step Twelve: Report and disseminate results
Have the results been disseminated to stakeholders in an appropriate form?
Have the results been fed back into the future planning of interventions?
8. Conclusion The proposed M&E framework can thus be integrated within the annual municipal SDBIP and
departmental scorecard, and the Performance Management System of the municipality, such that
there could be a cyclically and systematic monitoring and evaluation of the strategy, overtime.
9. Annexure 9.1 Business Plan - Informal Trade Shared Economic Infrastructure Facility
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Business Plan
Informal Trade
Shared Economic Infrastructure
Facility
(SEIF)
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1. Introduction
1.1 Municipality: Nyandeni Local Municipality
1.2 Contact Person: Miss Bongiwe Ngqongwa
1.3 Title: LED Manager
1.4 Adresss: Municipality House
B. Nomandela Drive
Libode
5160
1.3 Contact Details: Tel: 047 555 5000
Cel: 082 779 9518
E-mail:[email protected]
1.4 Project Location: Libode and Ngqeleni Towns
2. Background Information
Nyandeni Local Municipality (NLM) is one of the five (5) Local Municipalities (LM) of the O.R Tambo District
Municipality, located in the Eastern Cape (EC) Province in South Africa (SA), situated in the eastern part of
the former Transkei region of the EC. According to the NLM IDP 2014/2015, the municipality is faced by
high unemployment (46.5%) and poverty levels (65.5%), which require targeted development and support
to the Small, Medium and Micro Enterprises (SMMEs), such that they can serve as vehicles to address this
status quo.
The municipality has an approved LED Strategy, together with an SMME and Cooperatives development
Strategy, and within that framework, the municipality undertook a process of developing a Situational
Analysis Report on the state of the Retail Sector in 2014, which culminated towards the development of a
Retail Sector Development Strategy in 2016, from the basis that the strategy can:
Increasingly strengthen the local economic capacity,
Improve the investment climate, and
Increase the productivity and competitiveness of local businesses, entrepreneurs and the labour
force, for overall economic growth.
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The Retail Sector Strategy was further aimed to be utilized as a tool by the municipality, as well as by other
role players within the enterprise development space, to ensure a dedicated, integrated and effective
development and support mechanism for the Retail Sector, which mainly consists of the Small Medium and
Micro Enterprises (SMMEs), including the Informal Traders, as well as Cooperatives Entities, for the
overall promotion of local economic development (LED), and thus contribute towards the district, the
provincial, and national economic growth targets.
The Retail Sector Strategy has identified “improving the provision of basic services and critical catalytic
infrastructure” as one of its strategic goals, towards the development of the retail sector in NLM, with
“trading support infrastructure” identified as a strategic programme, that would require the implementation
of a Shared Economic Infrastructure Facilities” as a priority project, in order to mainstream the participation
of the Informal trade Sector into economy of NLM.
3. Project Description
The project is about leveraging public sector investment that would provide the necessary infrastructure, so
as to create an enabling environment for informal businesses to crowd-in investment in the inner city, and
around nodal areas, where there is clear business activity taking place. The shared infrastructure facilities
will take the form of any of these, depending on the priorities of the municipality:
Shelter/ stalls for trading areas.
Warehouse/storage facilities.
Cold storage facilities for common use.
Business industrial facilities.
The aim is to support informal trade businesses, with an intention to improve access, create local economic
benefits, and optimize performance of businesses operating from these facilities.
4. Objectives
The overall objective of the project is to enable the empowerment of the local communities in structuring
their socio-economic economic situations through an effective utilization of hard infrastructure, so as to
stimulate the growth required to create jobs, and thereby reduce poverty in NLM.
The specific objective is to uplift the current state of the informal trade sector, through the provision of
appropriate Shared Economic Infrastructure facilities, for improved competitiveness and sustainable trading
of this sector.
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5. Rationale and Impact
It has been researched in SA generally, that in rural base economies, the size of the informal economy can
be greater than the formal economy, which is further confirmed by the Eastern Cape Socio-Economic
Consultative Council (ECSECC) Report: Potential Role of Micro-Businesses and Entrepreneurs in the
Eastern Cape Informal Sector (June, 2015).
This Report states that tighter fiscal conditions, weaker economic growth prospects, high unemployment
and poverty rates are coercing government into achieving its objectives of creating decent jobs, overcoming
poverty and reducing inequality more rapidly. To survive this harsh environment and escape extreme
poverty and unemployment, most people embark on various subsistence activities such as self-
employment in informal businesses. This is evidenced by growth in informal employment that has outpaced
growth in formal employment, as evident from the EC employment index – where between 1995 and 2013,
jobs in the informal sector increased by 64 index points (from 100% to 164%), while jobs in the formal
sectors declined by 14 index points (from 100% to 86%).
The above means in other words, that for every 100 people employed in the EC formal sector in 1995,
there were 14 fewer people in 2013. However, for every 100 people employed in the EC’s informal sector in
1995, there were 64 additional people in 2013. This implies an employment shift from the formal economy
to the informal economy; which is an inflow into the informal sector in the form of self-employment, through
the creation of micro-enterprises.
This is also the case in a rural base economy like NLM, where economic growth is not only determined by
the formal economy (the economic sector that is legally registered and pay taxes), but also by the informal
economy (whose activities are not legally registered). This is the same sector that also interacts with the
formal economy by supplying it with certain goods and services. The upliftment of the informal businesses
for local economic development can therefore not be undermined in NLM.
The Department of Small Business Development (DSBD) has further development the National Informal
Business Upliftment Strategy (NIBUS), in order to prioritize targeted support interventions aimed at
developing this sector in South Africa. This department further initiated the Shared Economic Infrastructure
Facility (SEIF), as a sub-programme of the Black Business Support Development Programme (BBSDP), in
response to the NIBUS identified interventions.
6. Target Groups/Beneficiaries
Informal Traders/ Hawkers/ Street Traders
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7. Other role players/stakeholders
OR Tambo District Municipality
Ntinga O.R Tambo Development Agency
Department of Small Business Development
8. Approximate Financial Requirements
R10 million
9. Pre-Conditions
Land Use Authorisation Permits
Technical drawings and designs (or at least preliminary designs), including details of capacity and
technical specifications of the infrastructure, if required
Environmental permits from the relevant authorities, if required
10. Utilization of funds
Site Clearing and Preperation
Buildings
Machinery, Equipment and Tools
Furniture and Fittings
Supplies
11. Sustainability
The project will be sustained though the provision of support infrastructure and continuous maintenance of
the facilities from the multi-year funding cycles of NLM, in collaboration with the stakeholders cited under
Point 7 above.
12. Implementation Timeframes
2016/2017